The California Department of Motor Vehicles requires drivers to have what it calls “financial responsibility” on any vehicles they are operating or parking on California roads. Most drivers fulfill this requirement through a motor vehicle liability insurance policy, but there are other types of qualifying responsibility that qualify. One of these options is to secure a surety bond for the amount of $35,000 from an insurance company licensed to do business in California.
The purpose of the bond guarantees to the DMV that the title to the vehicle is clear, as represented. If there is a claim, or if someone else has a lien or owns the vehicle, then the DMV will file against the bond. The surety would then be used to pay the claim and then seek recovery from the driver normally. Drivers must carry “evidence of financial responsibility” in the vehicle at all times, which consists of the number of the surety bond (and the name of the attached company) in effect at that time (CA Vehicle Code Section 16020).
Any vehicle owner can use a surety bond to demonstrate their financial responsibility to the DMV; there are no application restrictions. While the specific rates vary among insurance companies, most sureties only require a deposit of a small percentage of the bond’s face value, so drivers do not actually need to lock up $35,000 with the company to obtain this coverage. Qualifying for a surety bond has similar requirements to qualify for general bonds, including demonstrated financial stability and good credit. However, individuals will be evaluated by companies on a case-by-case basis for pre-qualification and approval for a surety bond.
Many large insurance companies (ie. 21st Century, All State, Geico) do not offer surety bonds, and only some smaller companies have it as an option in lieu of car insurance. To find a company that offers it in your area, you should contact a local insurance broker who directly deals with more than one company.
(This article is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. If you have any questions about this Article, please call or e-mail Stephen Vokshori, Esq. (213.785.5366 / stephen@voklaw.com) or any other member of Vokshori Law Group.)
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